EUR-USD drifted to sub-1.3850 levels for the first time since last Thursday in otherwise fairly featureless trade. The continuing Russia v NATO Crimean standoff has weighed on the euro a little today, while some bank research notes in circulation are seeing EUR-USD as being overvalued, partly with the U.S. Fed expected to remain on a tapering course. Data out of Europe today included a dip in the German trade surplus and near expectations U.K. industrial production. In Asia, the BoJ did the expected and left its overnight rate at 0.1% and the monetary base target at Y60-70 tln. The central bank also left its economic assessment unchanged, and while a recent soft patch in export performance was mentioned this was downplayed by BoJ Governor Kuroda as being due to cold weather and the lunar new year. A poll in the Nikkei newspaper found that 55% of Japanese plan to cut spending after 3 percentage point sales tax hike in April, which should help maintain expectations for further BoJ stimulus in Q2. USD-JPY trade was quiet today, and the pair posted a narrow 103.19-103.42 range, settling around 103.30-35. AUD-USD was settled in the low-to-mid 0.90s, seeing on minor chop in the wake of the NAB business confidence for February, which dipped to 7 from 9.

[EUR, USD]EUR-USD has been drifting moderately lower, though still remaining in a consolidation of the gains seen after last week's steep rally from the low 1.37s after the ECB upped growth forecasts while refraining from further monetary easing. Friday's much better than expected U.S. February jobs report put a lid on the rally, leaving a 29-month high at 1.3915. This level is now marked as a resistance, along with 1.3900. We're not keen on EUR-USD at these levels due to the continuing geopolitical tensions over the Ukraine and the fact that the U.S. jobs data supports the view of the Fed continuing its tapering of QE assets. Support comes in at 1.3825 and 1.3810.

[USD, JPY]USD-JPY trade was quiet today, and the pair posted a narrow 103.19-103.42 range, settling around 103.30-35. The BoJ did the expected and left its overnight rate at 0.1% and the monetary base target at Y60-70 tln. The central bank also left its economic assessment unchanged, and while a recent soft patch in export performance was mentioned this was downplayed by BoJ Governor Kuroda as being due to cold weather and the lunar new year. A poll in the Nikkei newspaper found that 55% of Japanese plan to cut spending after 3 percentage point sales tax hike in April, which should help maintain expectations for further BoJ stimulus in Q2. Bigger picture, there is muted overall directional impetus in USD-JPY within the 100.00-105.00 range. BoJ policy would favour continued yen weakness, but the threat of China slowdown is an offsetting yen-supportive force, via the possible association of negative consequences on global stock markets given the yen's normal inverse correlation with equities. Resistance is marked at 103.45. Support is at 102.50, and 101.00-101.07, the latter of which marks the position of the 200-day moving average.

[GBP, USD]Sterling has established a lower profile after deputy governor of the Monetary Policy Committee, Bean, on Monday said any further appreciation of the pound would not be particularly helpful in terms of facilitating a rebalancing towards net exports. The February BRC retail sales report also unexpectedly dropped by 1.0%. January industrial production showed the expected improvement, but real sector data like these are rear-view indicators. The Feb-27 low of 1.6616 is the next target.. Support is marked by this, 1.6600 and the Feb-24 low of 1.6583. EUR-GBP tested its Feb-6 peak of 0.8350, but has so far not broken it. We haven't been keen on Cable at these levels, thinking that the rally that's been seen since mid last year is likely over. We think the U.K. recovery will moderate, in part due to the generally firm levels of sterling, while on the U.S. side of the equation the strong February jobs report supports the view of the Fed continuing its tapering of QE assets.

[USD, CHF]EUR-CHF has drifted back under 1.2200 in recent sessions as geopolitical risk remains over the Ukraine, which is returning support to the safe haven franc. This leaves the rebound high at 1.2214, though there remains some distance from the fresh cycle low of 1.2104 that was seen on Monday, which is the lowest level seen since June last year. SNB's Jordan said over the weekend that the central bank would defend the 1.2000 EUR-CHF limit if concerns about Ukraine drove the franc higher. We don't advise speculative accounts to hold long CHF exposures below 1.2100 given the threat of SNB intervention ahead of 1.2000. The SNB has signalled that it would only consider removing it if inflation was much higher (CPI dipped back to -0.2% y/y in February).

[USD, CAD]USD-CAD logged a two-week low under 1.1000 last week only to rebound above 1.1100. In the bigger picture, we still think that the pair may be forming a potential double top formation, which for technical analysts is a classic trend reversal pattern. The pair's capping out just shy of 1.1200 on Feb-21 left the late January major trend peak at 1.1224 unchallenged. This price action has been accompanied by a drop in upside momentum, and together these developments point to a possible end of the bullish phase that was seen between October and January, in turn implying potential for a sustained retracement or a period of stasis. Support comes in at 1.1000, ahead of 1.0955 (the Mar-7 low).

Replies: XE Market Analysis: North America - Mar 11, 2014

GBPUSD; triangle placed in wave (iv) suggest that move to the lows was final within a five wave decline from 1.6783. We also can see a divergence between waves (iii) and waves (v) so rally can be seen in sessions ahead. Break of 1.6634 will confirm a completed leg, maybe even of a wave C of a three wave retracement from Feb 17th high, so we should be aware of a bullish reversal in that instance.
Chart here >> http://www.ew-forecast.com/content/fck/gbprusd%20Mar%2012%202014%20intra(1).png